|
on Labour Economics |
| By: | John Haltiwanger; Henry Hyatt; Erika McEntarfer |
| Abstract: | Do the job-to-job moves of workers contribute to the cyclicality of employment growth at different types of firms? In this paper, we use linked employer-employee data to provide direct evidence on the role of job-to-job flows in job reallocation in the U.S. economy. To guide our analysis, we look to the theoretical literature on on-the-job search, which predicts that job-to-job flows should reallocate workers from small to large firms. While this prediction is not supported by the data, we do find that job-to-job moves generally reallocate workers from lower paying to higher paying firms, and this reallocation of workers is highly procyclical. During the Great Recession, this firm wage job ladder collapsed, with net worker reallocation to higher wage firms falling to zero. We also find that differential responses of net hires from non-employment play an important role in the patterns of the cyclicality of employment dynamics across firms classified by size and wage. For example, we find that small and low wage firms experience greater reductions in net hires from non-employment during periods of economic contractions. |
| JEL: | E24 E32 J63 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21235&r=lab |
| By: | Bagaria, Nitika (London School of Economics); Petrongolo, Barbara (Queen Mary, University of London); Van Reenen, John (CEP, London School of Economics) |
| Abstract: | Disability rolls have escalated in developed nations over the last 40 years. The UK, however, stands out because the numbers on these benefits stopped rising when a welfare reform was introduced that integrated disability benefits with unemployment insurance (UI). This policy reform improved job information and sharpened bureaucratic incentives to find jobs for the disabled (relative to those on UI). We exploit the fact that the policy was rolled-out quasi-randomly across geographical areas. In the long-run the policy improved the outflows from disability benefits by 6% and had an (insignificant) 1% increase in unemployment outflows. This is consistent with a model where information helps both groups, but bureaucrats were given incentives to shift effort towards helping the disabled find jobs and away from helping the unemployed. Interestingly, in the short-run the policy had a negative impact for both groups, suggesting important disruption effects. We estimate that it takes about six years for the estimated benefits of the reform to exceed its costs, which is beyond the time horizon of most policy-makers. |
| Keywords: | incentives, public sector, unemployment benefits, performance standards |
| JEL: | H51 I13 J18 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9089&r=lab |
| By: | Bergemann, Annette (University of Bristol); Riphahn, Regina T. (University of Erlangen-Nuremberg) |
| Abstract: | We study the short, medium, and longer run employment effects of a substantial change in the parental leave benefit program in Germany. In 2007, a means-tested parental leave transfer program that had paid benefits for up to two years was replaced by an earnings related transfer which paid benefits for up to one year. The reform generated winners and losers with heterogeneous response incentives. We find that the reform speeds up the labor market return of both groups of mothers after benefit expiration. The overall time until an average mother with (without) prior claims to benefits returns to the labor force after a birth declined after the reform by 10 (8) months at the median. We show that likely pathways for this substantial reform effect are changes in social norms and mothers' preferences for economic independence. |
| Keywords: | female labor supply, maternal labor supply, parental leave, parental leave benefit, child-rearing benefit, parents' money |
| JEL: | J13 J21 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9073&r=lab |
| By: | Inderbitzin, Lukas; Staubli, Stefan; Zweimüller, Josef |
| Abstract: | We explore how extended unemployment insurance (UI) benefits for older workers affect early retirement and welfare. We argue that extending UI benefits generates program complementarity (more labor market exits and disability benefit take-up in the future) and program substitution (less disability benefit take-up in the present). Exploiting a policy change in Austria, which extended UI benefits to 4 years, we find program complementarity effects for workers aged 50+ and program substitution effects for workers aged 55+. We apply the Baily-Chetty formula for optimal UI to account for complementarity and substitution, showing that UI benefits for older workers were too generous. |
| Keywords: | disability; early retirement; optimal benefits; policy reform; unemployment |
| JEL: | J14 J26 J65 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10646&r=lab |
| By: | Regis Barnichon; Andrew Figura |
| Abstract: | This paper argues that a key aspect of the US labor market is the presence of time-varying heterogeneity across nonparticipants. We document a decline in the share of nonparticipants who report wanting to work, and we argue that that decline, which was particularly strong in the second half of the 90s, is a major aspect of the downward trends in unemployment and participation over the past 20 years. A decline in the share of "want to work" nonparticipants lowers both the participation rate and the unemployment rate, because a nonparticipant who wants to work has (i) a higher probability of entering the labor force (compared to other nonparticipants), and (ii) a higher probability of joining unemployment conditional on entering the labor force. We use cross-sectional variation to estimate a model of nonparticipants' propensity to want to work, and we find that changes in the provision of welfare and social insurance, possibly linked to the mid-90s welfare reforms, explain about 50 percent of the decline in desire to work among nonparticipants. |
| JEL: | E24 J6 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21252&r=lab |
| By: | Piotr Lewandowski; Kamil Stronski; Roma Keister |
| Abstract: | In this paper we apply the cohort model of the pension scheme to analyse the impact of labour market segmentation, in particular the use of contracts on mandate, on expected retirement benefits in Poland. Heterogeneity of labour force and impact of differences in years of employment, contributions paid and account indexation are taken into consideration. The effects of policy instruments aimed at increasing the stream of contributions paid by workers with contracts of mandate are evaluated. We find that the expected retirement benefit in the segment of contracts of mandate is lower by 17% than in the segment of employment contracts. The major cause of this gap between segments are lower contributions in the case of men and shorter life-cycle employment in the case of women. The obligation to pay contributions on all contracts of mandate from the minimum wage level will enable closing the pension gap by ca. 4.4 pp. unless the obligation increases unemployment risk in the segment of contracts of mandate. Additional saving of 2% of the gross wage during spells of work on contract of mandate reduces the gap by less than 1 pp. |
| Keywords: | labour market segmentation, pensions, defined-contribution pension scheme |
| JEL: | J26 J32 J68 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:ibt:wpaper:wp092015&r=lab |
| By: | Michael Amior; Alan Manning |
| Abstract: | Local differences in US employment-population ratios and unemployment rates have persisted over many decades. Using decennial census data from 1950-2010, we investigate the reasons for this. The persistence cannot be explained by permanent differences in amenities, local demographic composition or the propensity of women to work. Population does respond strongly to differences in economic fortunes, although these movements are not large enough to eliminate shocks within a decade. Over the longer run, persistence in local joblessness is largely explained by serial correlation in the demand shocks themselves. |
| Keywords: | Local labor markets, unemployment, inactivity, internal migration, commuting |
| JEL: | J61 J64 R23 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1357&r=lab |
| By: | Ross Levine; Chen Lin; Beibei Shen |
| Abstract: | Do labor regulations influence the reaction of stock markets and firm profitability to cross-border acquisitions? We discover that acquiring firms enjoy smaller abnormal stock returns and profits when targets are in countries with stronger labor protection regulations, i.e., in countries where laws, regulations, and policies increase the costs to firms of adjusting their workforces. These effects are especially pronounced when the target is in a labor-intensive or high labor-volatility industry. Consistent with labor regulations shaping the success of cross-border deals, we find that firms make fewer and smaller cross-border acquisitions into countries with strong labor regulations. |
| JEL: | F2 G34 G38 J6 J8 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21245&r=lab |
| By: | Huber, Martin; Lechner, Michael; Strittmatter, Anthony |
| Abstract: | This paper evaluates the effect of a voucher award system for assignment into vocational training on the employment outcomes of unemployed voucher recipients in Germany, along with the causal mechanisms through which it operates. It assesses the direct effect of voucher assignment net of actual redemption, which may be driven by preference shaping/learning about (possibilities of) human capital investments or simply by costs of information gathering. Using a mediation analysis framework based on sequential conditional independence assumptions and semiparametric matching estimators, our results suggest that the negative short term and positive long term employment effects of voucher award are mainly driven by actual training participation. However, also the direct effect of just obtaining the voucher is negative in the short run. This points to potential efficiency losses of voucher award systems if individuals decide not to redeem, as employment chances are lower than under non-award in the short run and under redemption in the long run, making non-redemption the least attractive option. |
| Keywords: | Mediation analysis, voucher award, training programmes, direct effects, indirect effects, causal mechanisms, causal channels, matching estimation |
| JEL: | J64 J68 C21 C31 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:usg:econwp:2015:14&r=lab |
| By: | Bhattacharyya, Chandril; Gupta, Manash Ranjan |
| Abstract: | This paper develops an endogenous growth model with human capital formation and ‘Efficiency Wage Hypothesis’ to investigate the growth effect of unionisation and to analyse properties of optimum income tax rate in the presence of an unionised labour market and with taxation only on labour income. ‘Efficient Bargaining’ model as well as ‘Right to Manage’ model is used to solve the negotiation problem between the labour union and the employer’s association. In both type modelling framework, the growth effect of unionisation is independent of its employment effect; and it depends on its net effect on worker’s efficiency. The growth rate maximizing tax rate on labour income is different from the corresponding welfare maximizing tax rate; and the nature of the growth effect of unionisation is different from its welfare effect. |
| Keywords: | Labour union; Efficiency wage hypothesis; Human capital Formation; income tax; Endogenous growth |
| JEL: | H21 H52 J24 J31 J51 O41 |
| Date: | 2015–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:64911&r=lab |
| By: | Boeri, Tito; Garibaldi, Pietro; Moen, Espen R |
| Abstract: | Financial market shocks and imperfections, alongside productivity shocks, represent both an impulse and a propagation mechanism of aggregate fluctuations. When labor and financial markets are imperfect, firms' funding and leverage respond to productivity changes. Models of business cycle with equilibrium unemployment largely ignore financial imperfections. The paper proposes and solves a tractable equilibrium unemployment model with imperfections in two markets. Labor market frictions are modeled via a traditional Diamond Mortensen Pissarides (DMP) model with wage positing. Financial market imperfections are modeled in terms of limited pledgeability, in line with the work of Holmstrom and Tirole. We show analytically that borrowing constraints increase unemployment volatility in the aftermath of productivity shocks. We calibrate the model to match key labor and financial moments of the US labor markets, and we perform two quantitative exercises. In the first exercise we ask whether the interaction between productivity shocks and borrowing constraints increase the volatility of unemployment with respect to models that focus only on the labor market imperfections. In the general specification of the model, both leverage and non pledgeable income move with the cycle. Our calibration exercise shows that the volatility of unemployment in response to productivity shock increases by as much as 50 percent with respect to a pure DMP model with wage posting. The second quantitative exercise explores the role of pure financial shocks on aggregate equilibrium. We calibrate pledgeability shocks to match the frequency of financial crisis and define financial distress as a situation in which internal liquidity completely dries up. The second exercise shows that full dry up of internal liquidity implies an increase in unemployment as large as 60 percent. These results throw new light on the aggregate impact of financial recessions. |
| Keywords: | financial frictions; search; unemployment volatility |
| JEL: | J00 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10648&r=lab |
| By: | Jimenez-Martin, Sergi (Universitat Pompeu Fabra); Vall-Castello, Judit (Universitat Pompeu Fabra); del Rey, Elena (Universitat de Girona) |
| Abstract: | In this paper we explore the effects of a labor market reform that changed the statutory minimum working age in Spain in 1980. In particular, the reform raised the statutory minimum working age from 14 to 16 years old, while the minimum age for attaining compulsory education was kept at 14 until 1990. To study the effects of this change, we exploit the different incentives faced by individuals born at various times of the year before and after the reform. We show that, for individuals born at the beginning of the year, the probabilities of finishing both the compulsory and the post-compulsory education level increased after the reform. In addition, we find that the reform decreases mortality while young (16-25) for both genders while it increases mortality for middle age women (26-40). We provide evidence to proof that the latter increase is partly explained by the deterioration of the health habits of affected women. Together, these results help explain the closing age gap in life expectancy between women and men in Spain. |
| Keywords: | minimum working age, policy evaluation, education, mortality |
| JEL: | J01 I12 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9092&r=lab |
| By: | Philippe Aghion; Ufuk Akcigit; Antonin Bergeaud; Richard Blundell; David Hémous |
| Abstract: | In this paper we use cross-state panel data to show a positive and significant correlation between various measures of innovativeness and top income inequality in the United States over the past decades. Two distinct instrumentation strategies suggest that this correlation (partly) reflects a causality from innovativeness to top income inequality, and the effect is significant: for example, when measured by the number of patent per capita, innovativeness accounts on average across US states for around 17% of the total increase in the top 1% income share between 1975 and 2010. Yet, innovation does not appear to increase other measures of inequality which do not focus on top incomes. Next, we show that the positive effects of innovation on the top 1% income share are dampened in states with higher lobbying intensity. Finally, from cross-section regressions performed at the commuting zone (CZ) level, we find that: (i) innovativeness is positively correlated with upward social mobility; (ii) the positive correlation between innovativeness and social mobility, is driven mainly by entrant innovators and less so by incumbent innovators, and it is dampened in states with higher lobbying intensity. Overall, our findings vindicate the Schumpeterian view whereby the rise in top income shares is partly related to innovation-led growth, where innovation itself fosters social mobility at the top through creative destruction. |
| JEL: | D63 J14 J15 O30 O31 O33 O34 O40 O43 O47 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21247&r=lab |
| By: | Paul Beaudry; Dana Galizia; Franck Portier |
| Abstract: | There is a long tradition in macroeconomics suggesting that market imperfections may explain why economies repeatedly go through periods of booms and busts, with booms sowing the seeds of the subsequent busts. This idea can be captured mathematically as a limit cycle. For several reasons, limit cycles play almost no role in current mainstream business cycle theory. In this paper we present both a general structure and a particular model with the aim of giving new life to this mostly dismissed view of fluctuations. We begin by showing why and when models with strategic complementarities—which are quite common in macroeconomics—give rise to unique equilibrium dynamics characterized by a limit cycle. We then develop and estimate a fully-specified dynamic general equilibrium model that embeds a demand complementarity to see whether the data favors a configuration supportive of a limit cycle. Booms and busts arise endogenously in our setting because agents want to concentrate their purchases of goods at times when purchases by others are high, since in such situations unemployment is low and therefore taking on debt is perceived as being less risky. A key feature of our approach is that we allow limit-cycle forces to compete with exogenous disturbances in explaining the data. Our estimation results indicate that US business cycle fluctuations in employment and output can be well explained by endogenous demand-driven cycles buffeted by technological disturbances that render those fluctuations irregular. |
| JEL: | E3 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21241&r=lab |
| By: | Howard Bodenhorn; Timothy W. Guinnane; Thomas A. Mroz |
| Abstract: | Understanding long-term changes in human well-being is central to understanding the consequences of economic development. An extensive anthropometric literature purports to show that heights in the United States declined between the 1830s and the 1890s, which is when the US economy industrialized and urbanized. Most research argues that declining heights reflects the impact of the industrialization process. This interpretation, however, relies on sources subject to selection bias. Changes in that selection mechanism may account for the declining heights. We show that the evidentiary basis of the puzzle is not as robust as previously believed. Our meta-analysis of more than 150 studies shows that declining-heights finding emerges primarily in selected samples. Finally, we offer a parsimonious diagnostic test for revealing (but not necessarily correcting for) selection bias. The diagnostic applied to four samples that underlay the industrialization puzzle shows compelling evidence of selection. |
| JEL: | J11 N11 N31 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21249&r=lab |
| By: | Marinescu, Ioana E. (Harris School, University of Chicago) |
| Abstract: | Learning about marriage quality has been proposed as a key mechanism for explaining how the probability of divorce evolves with marriage duration, and why people often cohabit before getting married. I develop four theoretical models of divorce, three of which include learning. I use data from the Survey of Income and Program Participation to test reduced form implications of these models. The data is inconsistent with models including a substantial amount of learning. On the other hand, the data is consistent with a model without any learning, but where marriage quality changes over time. |
| Keywords: | divorce, job loss, learning |
| JEL: | J12 J63 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9075&r=lab |
| By: | Guldi, Melanie (University of Central Florida); Herbst, Chris M. (Arizona State University) |
| Abstract: | Broadband (high-speed) internet access expanded rapidly from 1999 to 2007. This expansion is associated with higher economic growth and labor market activity. In this paper, we examine whether the rollout also affected the social connections teens make. Specifically, we look at the relationship between increased broadband access and teen fertility. We hypothesize that increasing access to high-speed internet can influence fertility decisions by changing the size of the market as well as increasing the information available to participants in the market. We seek to understand both the overall effect of broadband internet on teen fertility as well as the mechanisms underlying this effect. Our results suggest that increased broadband access explains at least thirteen percent of the decline in the teen birth rate between 1999 and 2007. Although we focus on social markets, this work contributes more broadly to an understanding of how new technology interacts with existing markets. |
| Keywords: | fertility, birth rates, broadband, new media |
| JEL: | J13 J18 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9076&r=lab |
| By: | Eichhorst, Werner (IZA) |
| Abstract: | There is considerable concern regarding the prospective development of employment levels and job types in the future. The paper tries to highlight major trends shaping the world of work in developed economies with the aim of giving a realistic account of probable developments and the contributions of different driving forces, importantly focusing on the role of actors such as policy makers, firms and individuals. While it is true that the future of work poses considerable challenges to actors at different levels, there is no need to be particularly worried. |
| Keywords: | future of work, globalization, innovation, structural change |
| JEL: | J11 J18 J21 J58 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izapps:pp102&r=lab |